E-Tailers Keep Missing Fulfillment Issues

As of this Christmas season, the news is out: Americans are ready to buy online. According to the Nielsen/NetRatings E-Commerce Holiday Index, online traffic increased in excess of 18 percent from the day before Thanksgiving through Nov. 26, often considered the largest retail shopping day of the year. Forrester Research, Cambridge, MA, predicts that a total of 17.4 million U.S. households will have shopped online in 1999, totaling $20.3 billion in revenues.

But no matter how wonderful e-commerce sales figures look, orders must ship to realize the sales and, sometime down the road, make a profit. By now, the story about Toys”R”Us not being able to ship orders three days before Christmas is legendary. The toys were in the warehouse, but the company was unable to ship them. “It’s taken us longer to get through the complex process of fulfilling orders than anyone expected,” said John Barbour, CEO of the Web-site division.

If orders are incorrect or don’t arrive on time, future sales are at risk because of disappointed and lost customers. If it’s true, as Forrester predicted, that 41 percent of the households that purchased online in 1999 were shopping on the Web for the first time, the shakeout has just begun. Who knows what repercussions there will be, based on the success of how those $8.3 billion new sales were shipped? The e-commerce industry is only just beginning to realize how important it is to both generate sales and ship boxes.

And yet the basic rule: efficient, high-quality service and operations to ensure customer satisfaction, remains the same. It’s only the mode of shopping that has changed. From the front-line of customer service to the backroom operations, the highest quality is expected by the consumer. They’ve come to expect the best levels of service, thanks to the L.L. Beans of the catalog world. And that same level of excellence is available, using new technology systems developed specifically for e-commerce.

The golden rule is still high-quality service: make sure the purchase is as easy and enjoyable as possible. Remember: If consumers don’t get what they want, when they want it, the first time they ordered – they won’t be back. So here are some critical rules for fulfillment:

• When the package arrives, the customer wants everything to be perfect. All operations procedures must be formalized to ensure proper handling of shipments, from an online inventory management system to inspection of all products from suppliers.

• Be sure you have the best people and systems for pick and pack services. This means staff who are careful, professional and well-trained to deal with harried situations, especially at peak times.

• Customers need to know the status of their shipment once an order is placed. Provide instant online delivery status and the ability to track an order while it’s in the mailstream.

• Managing returns is an integral part of the process. This includes immediate credit to customers returning stock and the quick turnaround of product back into inventory for new orders.

• Quality fulfillment won’t help if it’s too expensive. Keep an eye on efficiencies, managing costs to keep them to a minimum.

Often, managers find the high cost of investment in new inventory and information systems is too much for small- to medium-sized businesses. There’s the seemingly impossible question: how to provide high-quality service to ensure customer satisfaction without investing in profit-eating hi-tech systems? The answer: it is often more cost-effective to turn to an outside fulfillment center, which already has the latest and greatest technology.

A word of warning: Don’t be fooled by low budget call-centers and fulfillment centers. There is a crucial difference between low cost and efficiency. Low cost is simply that, lower costs to you. But efficiency implies better overall service, at a lower price. There are hidden additional costs to many of the low-quality services because of the low budget service they often provide. Low-budget centers don’t focus on service, just costs, and current and future profitability lies in repeat sales and future sales, not just current sales.

Don’t anger customers by cutting corners. They want live customer service people, able to take and respond to questions immediately. Customers want their calls answered, not read to them from a script, and they need to feel they are speaking with someone who is knowledgeable about the product.

In order to be sure customers are getting the best quality customer service, managers need data to review what’s going on at the outside source. Here are some of the key database management factors to look for comparison shopping for a vendor:

• Does the outside service provider understand the information management needs? This includes what’s selling and who’s buying.

• Will the service provider tailor or customize marketing and operational reports? In the overall management of the buyer database, an outside source must be able to slice and dice the information many ways, for many different types of reports. This information allows managers to measure and analyze the effectiveness of marketing efforts, the profitability of products, etc.

• Does the outside source have the systems and ability to identify key customer information? Based on this feedback and data, an outside source can work with you to ensure the highest-quality service, specifically targeted to your customers.

Perhaps the most important question to consider is this: should an outside resource be a vendor or a partner? Look for a resource that is eager to help increase your profitability. This may be through data reporting, inventory management, or higher sell-rates at a call center. But most importantly, find someone who understands your needs, and who will look for new ways to help you. Find a resource that cares about providing the highest quality service. Otherwise, you’ll have so many problems and hidden expenses that you may end up wishing you’d kept it all inhouse. Fulfillment is the true backbone of a business, and it can make or break a business’s profitability.

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